VES-13-18-RR:IT:EC 114183 GOB
Port Director of Customs
Attn.: Vessel Repair Liquidation Unit, Room 415
P.O. Box 2450
San Francisco, CA 94126
RE: Vessel Repair Entry No. C31-0005034-4; ARCO ALASKA, V-344;
19 U.S.C. 1466; Application
Dear Madam:
This is in response to your memorandum of November 13, 1997,
which forwarded the application for relief submitted on behalf of
ARCO Marine, Inc. ("applicant") with respect to the above-referenced vessel repair entry.
FACTS:
The evidence of record indicates the following. The ARCO
ALASKA (the "vessel"), a U.S.-flag vessel owned and operated by
the applicant, arrived at the port of Valdez, Alaska on June 25,
1997. The subject vessel repair entry was subsequently filed.
The vessel underwent certain foreign shipyard work in Ulsan,
Korea.
ISSUE:
Whether the subject items are dutiable pursuant to 19 U.S.C.
1466(a).
LAW AND ANALYSIS:
19 U.S.C. 1466 provides for the payment of duty at a rate of
fifty percent ad valorem on the cost of foreign repairs to
vessels documented under the laws of the United States to engage
in foreign or coastwise trade, or vessels intended to be employed
in such trade.
In its application of the vessel repair statute, the Customs
Service has held that modifications, alterations, or additions to
the hull of a vessel are not subject to vessel repair duties.
The identification of work constituting modifications vis-a-vis
work constituting repairs has evolved from judicial and
administrative precedent. In considering whether an operation
has resulted in a nondutiable modification, the following factors
have been considered. These factors are not by themselves
necessarily determinative, nor are they the only factors which
may be relevant in a given case. However, in a given case, these
factors may be illustrative, illuminating, or relevant with
respect to the issue of whether certain work may be a
modification of a vessel which is nondutiable under 19 U.S.C.
1466:
1. Whether there is a permanent incorporation into the hull
or superstructure of a vessel, either in a structural sense or as
demonstrated by means of attachment so as to be indicative of a
permanent incorporation. See United States v. Admiral Oriental
Line, 18 C.C.P.A. 137 (1930). However, we note that a permanent
incorporation or attachment does not necessarily involve a
modification; it may involve a dutiable repair or dutiable
equipment.
2. Whether in all likelihood an item would remain aboard a
vessel during an extended lay-up.
3. Whether an item constitutes a new design feature and
does not merely replace a part, fitting, or structure that is
performing a similar function.
4. Whether an item provides an improvement or enhancement
in operation or efficiency of the vessel.
You request our review with respect to numerous items. The
item numbers listed below are taken from the lefthand column
(marked "CF 226 No.") on the spreadsheets.
Item 57. The invoice terms this item "Butterworth Steam
Return System Modification." We find that this item is dutiable
vessel equipment because it is more akin to equipment of the
vessel than to the hull of the vessel.
Item 58. The applicant states that this item is a "USCG
Required Test." However, that is not reflected on the invoice,
which merely states "foam content testing." We find that this
item is dutiable.
Item 66. The applicant refers to this item as "Assistance
to accomplish ABS Survey of Hull." However, the invoice, which
indicates ultrasonic gauging, does not reflect an ABS survey. We
find that this item is dutiable.
Item 67. The applicant states that the subject "agency
fees" were "incurred in order for the vessel to drydock for
required ABS and USCG surveys and inspections." The invoice does
not reflect that these fees were incurred for ABS and USCG
surveys and inspections. It reflects typical general services
and/or drydock costs. These costs are to be prorated between
dutiable and nondutiable costs.
Item 67a. The invoice reflects that this cost was incurred
for slop and sludge disposal. This cost is to be prorated, as we
ruled in Ruling 113798 dated January 9, 1997.
Item 100-20 105. We find that the staging, lighting, and
ventilation for the ABS Special Survey are nondutiable as items
incident to a nondutiable survey.
Item 100-21. We find that the removal of pipes and valves
for an ABS Special Survey are nondutiable as items incident to a
nondutiable survey.
Item 100-24. We find that the inspection preparation cost
is dutiable because it includes grit blasting and spotting of
"repaired areas..."
Item 100-38. We find that the full tailshaft inspection is
dutiable because it appears to include a repair, i.e., the
removal of "any surface cracks in tailshaft taper with pencil
grinding."
Item 100-40. We find that the spurs line cutter
installation is a nondutiable modification.
Item 100-45. We find that the valves modification (all
three itemized costs) is a nondutiable modification.
Item 100-54. We find that the IGS sealing water pump
suction modification is a nondutiable modification.
Item 200-1. We find that the port and starboard boiler fire
side cleaning and refractory work is nondutiable as incident to
an ABS boiler survey and a U.S. Coast Guard biennial boiler
inspection.
Item 200-5. We find that the regasketing cost is
nondutiable as incident to an ABS boiler survey and a U.S. Coast
Guard biennial boiler inspection.
Item 200-16 206.3. We find that the extension of the
existing foundations is a nondutiable modification.
Item 200-25 211.B. We find that the uptake modification
with respect to the boiler uptake expansion joints is a
nondutiable modification.
Item 300-28 314. We find that the installation of a new,
permanent catwalk is a nondutiable modification.
Item 300-29 314.1. We find that the relocation of drain
lines in the way of the new catwalk is a nondutiable
modification.
Item 300-68 337. We find that the installation of two
isolation valves and one bypass line is a nondutiable
modification.
Item 500-15 507. We find that the installation of "cable
chaffing cover around the signal cables at cable tray
penetrations..." is dutiable equipment pursuant to 19 U.S.C.
1466.
Item 600-8 605. We find that the toilet and shower decks
modification is a nondutiable modification.
Item 700-17 (709). The invoice reflects a modification of
pump room casing. We find that this is a nondutiable
modification.
Item 700-18 (710). The invoice reflects a "Fwd storeroom
CVK modification" including the installation of pipe columns,
replacement of CVK web plate and replacement of under deck
stiffeners. We find that this item is a dutiable repair based on
the "replacement" of certain items.
Item 700-19 (710-1). The invoice provides: "Fwd store room
CVK modification ... Installed two (2) triangle brackets... We
find that this is a nondutiable modification.
Item 700-20 (710-2). The invoice provides, in pertinent
part: "Fwd store room CVK modification ... Replace one (1)
designated under deck long.'s located from frame 16-19 port side
approx. 5/8" x 24" x 12 ft with 2" flange (bend 90 degree)." We
find that this is a dutiable repair based on the replacement of
the under deck longitudinal.
Item 700-22 (710.3). The invoice provides, in pertinent
part: "Fwd store room CVK modification ... replace the CVK web
flange..." We find that this is a dutiable repair based on the
replacement of the CVK web flange.
Item 700-24 (712). The invoice provides, in pertinent part:
"Double bottom trunks modification (5) ... Installed and welded
to each port double bottom trunk..." We find that this item is a
nondutiable modification.
Item 800-15 804 (cleaning). The job description provides:
"Cargo Pump Relief Valves, Check Valves, Piping Repairs." We
find that this item is a dutiable repair.
Item 800-18 806. The invoice provides: "Eductor discharge
... Clean, Crop out, renew and weld..." We find that this item
is a dutiable repair.
Item 800-32 809. The invoice provides, in part: "#2 Cargo
Pump Suction Strainer Modification." The applicant states: "The
work involved the installation of a large heavy beam and supports
to increase the strength of the supports that secure the
strainer." We find that this item is a nondutiable modification.
HOLDING:
As detailed above, the application is granted in part and
denied in part.
Sincerely,
Jerry Laderberg
Chief,
Entry Procedures and Carriers
Branch